Sydney CBD to unlock new opportunities for office market

The latest Property Council of Australia’s Office Market Report has revealed significant opportunities for businesses in the Sydney CBD office market with over 150,000sqm of supply to be unlocked in 2020.

The Sydney CBD vacancy rate recorded only a slight increase from 3.7 per cent to 3.9 percent mainly due to negative demand as demand rises in areas outside of the CBD.

The expected supply of office space is set to significantly increase by 250,000sqm over the next couple of years especially in the Premium and A Grade segments, responding to positive demand.

“Sydney’s office market has traditionally been very tight, and though it has always been strong, opportunities for larger corporations to move to the Sydney CBD have been limited by a lack of available office space of the right size, scale and standard,” said Property Council of Australia’s NSW Executive Director Jane Fitzgerald.

“The government’s decentralisation agenda has also shifted a number of large-scale tenancies to Parramatta, and recent office consolidation in the private sector has resulted in close to 100,000sqm coming off the market, pending refurbishment.

“However, with a large pipeline of premium office space expected to enter the market over the next few years, this is a positive sign for the industry and will unlock major opportunities for companies to explore options to invest and relocate workforces into the Sydney CBD.

“Our future looks good – Sydney continues to have strong fundamentals as a commercial centre, with a strong pipeline of infrastructure projects such as the roll out of WestConnex, the light rail and Sydney West Metro set to make the CBD even more accessible.

“We are also seeing welcome improvements with regards to strategic planning across the city, and this is reflected in the progression of the Central Sydney Planning Strategy. The key will be continuing to create the right environment for investment and ensuring we have the right planning approach to give Sydney the competitive edge over other global cities.”

Media contact:  William Power | M 0429 210 982 | E wpower@propertycouncil.com.au

 

Office Market Report January 2020

Analysis – Sydney CBD market

 

Headline comments:

  • Sydney CBD vacancy increased over the period
  • The increase was due to negative demand
  • Positive demand was concentrated in the Premium and A Grade segments
  • There is a significant amount of space in the pipeline over the short to medium term

 

Vacancy analysis:

  • Vacancy in the Sydney CBD office market increased from 3.7 percent to 3.9 percent
  • This was due to -41,110sqm of net absorption
  • Supply additions over the period totalled 70,189sqm while 100,727sqm of space was withdrawn

 

Premium:

  • Vacancy increased from 2.7 percent to 3.6 percent
  • This was due to 40,275sqm of supply additions
  • Demand was still positive, with 19,286sqm of net absorption recorded
  • Withdrawals over the period totalled 9,164sqm

 

A Grade:

  • Vacancy decreased from 3.1 percent to 2.6 percent
  • This was due to 19,847sqm of net absorption
  • Supply additions totalled 13,952sqm
  • 3,865sqm of space was withdrawn

 

B Grade:

  • Vacancy increased from 4.2 percent to 5.2 percent over the period
  • This was due to -74,545sqm of net absorption
  • Supply additions over the period totalled 15,962sqm while 80,607sqm of space was withdrawn

 

C Grade:

  • Vacancy increased from 6.2 percent to 6.8 percent
  • This was due to -5,533sqm of net absorption
  • 2,749sqm of space was withdrawn over the period

 

D Grade:

  • Vacancy decreased from 5.9 percent to 3.7 percent
  • This was due to 4,342sqm of withdrawals

 

Future supply:

  • 154,424sqm of new stock is due to enter the market in 2020
  • This will be followed by 96,548sqm in 2021
  • 143,481sqm is due to come online from 2022 onwards
  • A total of 149,080sqm of space is mooted

 

 

Key market indicators, Sydney CBD (aggregate)

Grade

Vacancy,

Jan 20 (%)

Vacancy,

Jul 19 (%)

Net absorption, 6 months to

Jan 20 (sqm)

Premium

3.6

2.7

19,286

A

2.6

3.1

19,847

B

5.2

4.2

-74,545

C

6.8

6.2

-5,533

D

3.7

5.9

-165

Total

3.9

3.7

-41,110


Office Market Report January 2020

Analysis – Macquarie Park market

Headline comments:

  • Vacancy decreased over the period
  • This was due to positive demand
  • Demand was concentrated in the upper grades of space
  • There is no space due to come online in 2021

 

Vacancy analysis:

  • Vacancy decreased from 4.9 percent to 4.4 percent over the six months to January 2020
  • This was due to 4,529sqm of net absorption
  • Demand was concentrated in the upper grades of space
  • No grade of space recorded negative demand over the period

 

Future supply:

  • There 49,874sqm due to come online in 2020
  • Nothing is due to be added in 2021
  • 66,785sqm is due to come online from 2022 onwards
  • 83,477sqm of projects are mooted

 

Key market indicators, Macquarie Park (aggregate)

Grade

Vacancy,

Jan 20 (%)

Vacancy,

Jul 19 (%)

Net absorption, 6 months to

Jan 20 (sqm)

Net absorption, 12 months to

Jan 20 (sqm)

A

3.3

3.8

2,909

1,868

B

7.4

8.2

1,620

2,493

C

11.6

11.6

0

0

Total

4.4

4.9

4,529

4,361


Office Market Report January 2020

Analysis – North Shore market

Headline comments:

  • Vacancy for the overall North Shore market decreased over the period
  • This was due to above average withdrawals
  • All North Shore markets recorded positive demand except North Sydney
  • There is significant amounts of space due to enter the North Shore market in 2020

 

Vacancy analysis:

  • Total vacancy for the North Shore decreased from 7.2 percent in July 2019 to 6.7 percent in January 2020
  • This was due to 15,255sqm withdrawals
  • Demand was negative with -4,991sqm of net absorption recorded
  • 2,000sqm of space was added over the period

 

North Sydney:

  • North Sydney vacancy decreased from 7.9 percent to 7.6 percent over the six months to January 2020
  • This was due to 11,755sqm of withdrawals
  • Demand was negative with -8,712sqm of net absorption recorded

Crows Nest / St Leonards:

  • Vacancy marginally increased from 6.9 percent to 7.0 percent
  • This was due to 2,000sqm of supply additions
  • Demand was positive with 1,538sqm of net absorption recorded

 

Chatswood:

  • Vacancy in Chatswood decreased in the six months to January 2020 from 5.7 percent to 3.7 percent
  • The decrease was due to 3,500sqm of withdrawals and 2,183sqm of net absorption

 

Future supply:

  • 128,026 sqm of space is due to come online in 2020
  • No space is due to be completed in 2021
  • 22,000sqm of space is due to come online from 2022 onwards


Key market indicators, North Shore (aggregate)

Grade

Vacancy,

Jan 20 (%)

Vacancy,

Jul 19 (%)

Net absorption, 6 months to

Jan 20 (sqm)

Net absorption, 12 months to

Jan 20 (sqm)

Premium

3.6

9.8

4,829

41,337

A

6.5

6.3

-1,273

-29,479

B

7.1

6.6

-11,491

-7,082

C

6.9

8.8

2,746

1,940

D

10.4

11.2

198

-200

Total

6.7

7.2

-4,991

6,516

 

Key market indicators, North Shore (by locale)

Locale

Vacancy,

Jan 20 (%)

Vacancy,

Jul 19 (%)

Net absorption, 6 months to

Jan 20 (sqm)

Net absorption, 12 months to

Jan 20 (sqm)

North Sydney

7.6

7.9

-8,712

3,823

Crows Nest / St Leonards

7.0

6.9

1,538

-60

Chatswood

3.7

5.7

2,183

2,753

 

Future supply, North Shore (by locale)

 

Future supply by year (sqm)

Locale

2020

2021

2022+

Mooted

North Sydney

98,026

0

11,000

0

Crows Nest / St Leonards

27,000

0

22,000

2,300

Chatswood

3,000

0

0

0

Total North Shore

128,026

0

33,000

2300